Palacio and Centro could not agree on inflation
The dispute over inflation broke out among government institutions. Both the inflation figures (CPI) for the end of 2022 and those for the end of 2023 were contradicted between the Strategy and Budget Department of the Presidency and the Central Bank, which published inflation forecasts with two-day intervals. Different estimate figures were also published in the Presidency’s Strategy and Budget documents. Former directors of the Central Bank said: “The account does not change in two days. Either there is no communication between them or they don’t take their inflation forecasts seriously. Also, the public no longer believes the predictions.”
22.3 PERCENT OR 24.0 PERCENT?
The Strategy and Budget Presidency officially announced that the CPI will be 65.0 percent at the end of this year and 24.0 percent at the end of 2023 in the 2023 Presidential Annual Program published on Tuesday, October 25. The budget for 2023, which was discussed in Parliament, was determined taking into account these estimates. Just two days later, the Central Bank, which announced its inflation report on Thursday, October 27, estimated that the CPI would be 65.2 percent at the end of this year and 22.3 percent at the end of next year. The Department of Strategy and Budget of the Presidency had forecast a CPI of 65 percent by the end of this year and 24.9 percent by the end of 2023 in the Medium Term Program (OVP) 2023-2025, announced on January 4. September. In the document on General Economic Goals and Investments of the 2023 Annual Program published in October, the Presidency included a CPI forecast of 24.9 percent for the end of 2023, different from the annual program.
Tax revenues in the budget decrease, the deficit grows and indebtedness increases.
Former central bank executives said the contradictory inflation forecasts point to a lack of communication and a lack of seriousness. “The Central Bank forecasts that 2023 inflation will be 22.3 percent, not 24 percent or 24.9 percent. If the tax collection in the budget is done according to the Program or the PMP and the Center’s forecast is more realistic, the tax collection in the budget will go down, the deficit will increase and indebtedness will increase”, he said.